Over the years, many businesses and households have benefited from low inflation. Our economy, on the other hand, is dealing with the risk of rising inflation. In this piece, we have compiled some helpful advice from 13 business leaders from around the world to help you prepare your company for any future inflation.
This interview was conducted by our VIP author Jerome Knyszewski
Title: Co-founder & CMO
By investing in automation technology we are able to combat inflation. We are adapting to new automated technology to increase the rate of our production and reduce cost. This way we are able to sustain a reasonable price for our customers without always increasing the price. Since investing in automation for our production technology, we are able to produce almost 20-35% more compared to before and the cost has significantly decreased. We are planning to increase the automation rate even further before the end of the year.
Title: Founder/Financial Analyst
I would suggest living with a strategy i.e., “sell more”. Outlined a sales strategy aligning it with robust marketing techniques to make your products better known in the market and, consequently, sell more, thus increasing the turnover of the business-a major contributor to depressing the effects of inflation on the business. For this to achieve, you need to increase the product mix as well in order to sell to customers that you did not serve until now. And also, you need to understand that Cost and Expense are two different entities. The cost is linked to the sale, and expenses are related to the maintenance of the business. This is a minute difference between these two. You need to analyze these two factors to know exactly how inflation may impact you and in what ways you can reduce its effects on your potential customers. Since cost occurs for the raw materials used for production, freight, taxes, and sales commissions, among others, therefore, monitoring and evaluating cost can help you see what you do, internally, to reduce the cost of the operation to benefit your consumers.
To prepare for inflation our company has taken the following measures: 1) We have allocated for larger than usual salary increases to help give us a buffer. When daily living expenses are steadily rising, we know that we need to ensure our team is well taken care of. If we don’t – high turnover could compound our problems. 2) We have negotiated longer term contracts with our suppliers wherever possible. For example: we have a 5 year contract with our CRM provider. 3) We have built inflationary price protection into our client contracts; e.g. we have a clause that says each year the price of services will go up with inflation. As well, we have increased our upfront list price for new customers. 4) Finally – we have put some energy into looking to cut any unnecessary costs or services that we can to help reduce overall spend.
Title: CEO and Founder
I am preparing my business for the upcoming inflation by setting up an inventory management system that will allow me to identify high demand products for me to focus on and to be prepared for the inflation before it occurs. The supply of money will continue to grow slower than the demand and will cause the price of most things to go up. I am planning on taking advantage of this growth by creating a new product line that will be very high quality and low price. I have already put together the team to help me with this and I just need to get started on the product line. I am going to use my current business as a capital to produce my new products and use the profits from my current business to fund the new business. I am also preparing myself by keeping my overhead low and my profits high so that I strike a profitable balance to keep the business running in spite of the effects of inflation. This is achieved by my standardizing my operations and delegating tasks to up-and-coming employees. My costs have been reduced due to my implementing new technologies in the workplace. My profits are high mainly because I have a very skilled workforce, who are experts in their fields, and I pay them a fair wage. With this in place, I am confident that the business will be able to weather the storm of inflation and continue to grow and expand.
Title: Chief Operating Officer
“To prepare your business for inflation, try to pay off as much debt as possible. Paying off debts is a wise decision because it can help you save money and better plan your finances. Rather than using your money to pay off the interest, you can free up some cash in case you face major financial problems due to inflation. Most other businesses have their loans and financial challenges to deal with, so do your best to stay ahead of the game by freeing up the business from debt before the economic situation worsens.”
Title: Head of Marketing
“Renegotiating with suppliers is one way to prepare for inflation. During inflation, all businesses struggle, and you don’t want to lose the services of your reliable suppliers. If your current suppliers provide you with the best deal to help your business thrive, consider extending your contracts with them for more years to lock in current prices. However, if you can’t see how you’ll be able to continue using their services, prepare the business by shopping around for better deals that are easier on your company’s finances.”
I’ve always had a close eye on inflation ever since I started my business. This is why ever since the start of last year, I’ve taken the following steps: – Make sure I only employ the people I actually need. Recently, I’ve even gone so far as to only work with part-time writers and agencies. This has greatly helped me keep my costs down, and I predict it’s going to continue being a big help in the future. – Invest in assets that can protect me against inflation. In my case, this has taken the form of ETFs, bonds and other safe haven assets. That way, I can retain the value of my capital so that I can finance future investments, and more easily take care of costs.
The following are some of the strategies I’ve opted to tackle inflation: 1. I’m trying to strike a balance between providing fair, competitive pricing while also attempting to gain a competitive advantage if at all possible in this environment. 2.I’m attempting to reduce my monthly debt obligations, which will free up funds to assist my company when inflation becomes a serious concern in the near future. 3.At the moment, I’m looking into getting a line of credit to aid with cash flow. If rising prices as a result of inflation become a problem for my company, this is something I’ll want to explore. 4.I’m also automating some of the more mundane, everyday tasks to save time and money in the long term.
Long-term inflation can have a significant influence on the firm. Inflation measures how much prices of goods and services have increased over time. Preparing for inflation, which is often unpredictable in terms of how long it will last, is strategic; one practical way I’m preparing my business is by buying in bulk; Purchasing in bulk ensures a lower price from the suppliers. If the cost of spending is likely to rise, a long-term contract that locks in prices might assist protect the budget. Another practical way is by raising prices; however, this method is tricky because it can cause a drop in customers; instead, the price of a specific product is reduced, attracting customers and prompting them to buy other products. Another practical method I’m preparing my firm for the future is by reviewing all business and production costs and eliminating costs that are a drain on the company’s resources. These methods are ways to prevent the business from long term inflation, reducing the effect on the business.
Some of the efforts I’ve taken to help my company weather inflation are stated below: 1. My research team discovered that organizations that invested more in automation before the pandemic fared better than others during the crisis. As a result, I’m utilizing technology such as robotic process automation (RPA), workflow, and intelligent document processing to free up people and increase their productivity. This will help me save money on labor and maintain the company’s stability. 2. I’ve implemented cross-functional spending controls to cut costs that can no longer be justified or that may be avoided by performing the work differently. This has enabled the organization to prioritize spending consistently and ensure that any identified savings do not reappear over time. 3.As inflation looms, I’m reevaluating my entire business and identifying what offers the most value and is truly necessary, allowing me to save money while also directing cash and scarce labor resources to areas that will help my firm thrive.
Title: Business Consultant
The best way to prepare for long-term inflation will vary depending on the specifics of your business. However, some tips to help you get started include reviewing your pricing strategy, increasing your inventory, and looking for ways to cut costs. However, some business owners may hedge against inflation by investing in assets likely to retain their value or increase value over time, such as gold or other precious metals. Others may choose to raise prices according to expected inflation rates to maintain profit margins. Ultimately, the best way to prepare for long-term inflation will vary depending on the unique needs of your business. By assessing your options and making a plan, you can help ensure that your business can weather any challenges that may come down the road.
Because inflation can be unpredictable, it’s critical to have a solid framework in place to let your firm easily respond to the possibility of an increase. Inflation’s influence on your business can be reduced in the following ways: Debt with an adjustable rate- While interest rates are still low, convert your adjustable or variable rate term loan or other debt to a fixed rate. Interest rates will surge if inflation starts to climb. Supply contracts- Examine your supply chain connections and arrangements and extend long-term fixed-price agreements to lock in excellent quality suppliers. This is particularly the case for purchasing commodities, which tend to react to inflationary pressures first and fastest. Customer contracts- Examine your client contracts to ensure that you have the flexibility to alter pricing as needed to pass on increasing costs or that you can raise rates at any time with little warning. Rise prices- If the industry and your contracts allow you to raise pricing today, try a slight increase every six months to keep up with the times. Start re-pricing each new project if you have a custom business. If you combine products, think about switching to an unbundled strategy in the future to help your customers cope with rising prices.
Title: Team Leader and Manager
You can increase your inventory, develop and implement a price planning strategy, and increase your marketing budget. Increasing your inventory can help to buffer the impact of inflation, as it will allow you to sell more products at the same price. You can also implement a price planning strategy by setting prices for your products based on expected inflation rates. This will help you to stay ahead of the curve and ensure that you are making a profit while prices are rising. Finally, increasing your marketing budget will allow you to reach new consumers and increase your visibility. This can be done through advertising, PR, and other forms of marketing. By taking these steps, you can help your business weather the impact of inflation and remain profitable in the long-term.